Question

Lori buys a $586 certificate of deposit (CD) that earns 6.6% interest that compounds monthly. How much will the CD be worth in 13 years? Express your answer rounded correctly to the nearest cent. Do not include units on your answer.

Answer 1

$1344.9

Explanation:

This problem can be solved using the compound interest formula

`A= P(1+r)^t`

Given data

A, final amount =?

P, principal = $586

rate, r= 6.6% = 0.066

Time, t= 13 years

Substituting our values into the expression we have

`A= 586(1+0.066)^1^3\\\ A= 586*(1.066)^13\\\ A= 586*2.295\\\ A= 1344.87`

To the nearest cent the in 13 years the CD will be worth $1344.9